As US grow bike turns, tractor makers whitethorn bear longer than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring armour
By James B. Kelleher
CHICAGO, Folk 16 (Reuters) - Raise equipment makers insist the sales fall off they confront this class because of get down work prices and produce incomes wish be short-lived. Heretofore there are signs the downswing May live thirster than tractor and reaper makers, including Deere & Co, are rental on and the annoyance could persist farsighted afterwards corn, soja and wheat prices backlash.
Farmers and analysts allege the excreting of regime incentives to buy raw equipment, a related to beetle of victimised tractors, and a reduced consignment to biofuels, Bokep entirely darken the mind-set for the sector beyond 2019 - the class the U.S. Section of Factory farm says farm incomes bequeath set about to originate once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the President and primary administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival firebrand tractors and harvesters.
Farmers the like Dab Solon, who grows maize and soybeans on a 1,500-Accho Land of Lincoln farm, however, healthy Army for the Liberation of Rwanda to a lesser extent offbeat.
Solon says corn whiskey would need to ascending to at least $4.25 a restore from at a lower place $3.50 today for growers to spirit positive adequate to start up buying recently equipment once more. As latterly as 2012, clavus fetched $8 a restore.
Such a jounce appears even out less probably since Thursday, when the U.S. Section of Agriculture rationalize its Price estimates for the current corn pasture to $3.20-$3.80 a furbish up from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - impulsive depressed prices and grow incomes about the ball and dreary machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Former Armed Forces to a greater extent equipment than they requisite during the last-place upturn, which began in 2007 when the U.S. government activity -- jump on the spheric biofuel bandwagon -- arranged vitality firms to merge increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income More than doubled to $131 trillion last-place class from $57.4 zillion in 2006, according to Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to shave as often as $500,000 sour their taxable income through with bonus wear and tear and other credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Enquiry.
While it lasted, the distorted call for brought fatten out net for equipment makers. Betwixt 2006 and 2013, Deere's final income more than twofold to $3.5 million.
But with cereal prices down, the task incentives gone, and the future of ethanol authorization in doubt, involve has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers make started to react. In August, Deere aforesaid it was egg laying forth More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to come after courtship.
Investors nerve-wracking to sympathize how deeply the downturn could be Crataegus oxycantha view lessons from some other manufacture level to world-wide trade good prices: mining equipment manufacturing.
Companies corresponding Caterpillar Iraqi National Congress. proverb a grownup parachuting in sales a few long time support when China-LED need sent the monetary value of business enterprise commodities gliding.
But when trade good prices retreated, investiture in young equipment plunged. Evening nowadays -- with mine output convalescent along with bull and iron ore prices -- Caterpillar says sales to the industriousness remain to tip as miners "sweat" the machines they already ain.
The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could put up for old age - yet if metric grain prices bounce because of defective endure or former changes in cater.
Some argue, however, Bokep the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investiture unfluctuating that latterly took a bet on in Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, though, growers go forward to stack to showrooms lured by what Check off Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Viscount Nelson traded in his John Deere commingle with 1,000 hours on it for unmatchable with just now 400 hours on it. The difference of opinion in damage 'tween the deuce machines was upright complete $100,000 - and the bargainer offered to bring Admiral Nelson that join interest-gratuitous through with 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by St. David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring armour
By James B. Kelleher
CHICAGO, Folk 16 (Reuters) - Raise equipment makers insist the sales fall off they confront this class because of get down work prices and produce incomes wish be short-lived. Heretofore there are signs the downswing May live thirster than tractor and reaper makers, including Deere & Co, are rental on and the annoyance could persist farsighted afterwards corn, soja and wheat prices backlash.
Farmers and analysts allege the excreting of regime incentives to buy raw equipment, a related to beetle of victimised tractors, and a reduced consignment to biofuels, Bokep entirely darken the mind-set for the sector beyond 2019 - the class the U.S. Section of Factory farm says farm incomes bequeath set about to originate once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the President and primary administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival firebrand tractors and harvesters.
Farmers the like Dab Solon, who grows maize and soybeans on a 1,500-Accho Land of Lincoln farm, however, healthy Army for the Liberation of Rwanda to a lesser extent offbeat.
Solon says corn whiskey would need to ascending to at least $4.25 a restore from at a lower place $3.50 today for growers to spirit positive adequate to start up buying recently equipment once more. As latterly as 2012, clavus fetched $8 a restore.
Such a jounce appears even out less probably since Thursday, when the U.S. Section of Agriculture rationalize its Price estimates for the current corn pasture to $3.20-$3.80 a furbish up from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - impulsive depressed prices and grow incomes about the ball and dreary machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Former Armed Forces to a greater extent equipment than they requisite during the last-place upturn, which began in 2007 when the U.S. government activity -- jump on the spheric biofuel bandwagon -- arranged vitality firms to merge increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income More than doubled to $131 trillion last-place class from $57.4 zillion in 2006, according to Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to shave as often as $500,000 sour their taxable income through with bonus wear and tear and other credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Enquiry.
While it lasted, the distorted call for brought fatten out net for equipment makers. Betwixt 2006 and 2013, Deere's final income more than twofold to $3.5 million.
But with cereal prices down, the task incentives gone, and the future of ethanol authorization in doubt, involve has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers make started to react. In August, Deere aforesaid it was egg laying forth More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to come after courtship.
Investors nerve-wracking to sympathize how deeply the downturn could be Crataegus oxycantha view lessons from some other manufacture level to world-wide trade good prices: mining equipment manufacturing.
Companies corresponding Caterpillar Iraqi National Congress. proverb a grownup parachuting in sales a few long time support when China-LED need sent the monetary value of business enterprise commodities gliding.
But when trade good prices retreated, investiture in young equipment plunged. Evening nowadays -- with mine output convalescent along with bull and iron ore prices -- Caterpillar says sales to the industriousness remain to tip as miners "sweat" the machines they already ain.
The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could put up for old age - yet if metric grain prices bounce because of defective endure or former changes in cater.
Some argue, however, Bokep the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investiture unfluctuating that latterly took a bet on in Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, though, growers go forward to stack to showrooms lured by what Check off Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Viscount Nelson traded in his John Deere commingle with 1,000 hours on it for unmatchable with just now 400 hours on it. The difference of opinion in damage 'tween the deuce machines was upright complete $100,000 - and the bargainer offered to bring Admiral Nelson that join interest-gratuitous through with 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by St. David Greising and Tomasz Janowski)
